[{"bbox": [96, 152, 1137, 339], "category": "Text", "text": "Correspondingly, surveys conducted by different ministries indicated the severe impact of the conflict on MSMEs. For instance, in the sampled 108 damaged MSMEs in the most affected four towns of the Amhara region; the conflict caused a 72 % of job losses. The estimated value of the damage of the conflict accounted for more than EUR 3 960 000 while estimated market potential lost due to discontinued operations accounted for EUR 47 140 000. While metal and wood works and agro-processing MSMEs were the most affected ones, others, such as textile & apparel, construction inputs, chemical and leather goods producing MSMEs were also affected. Similarly, in Afar region, the two most affected Zones by the conflict account for 75 % of the total MSMEs in the region."}, {"bbox": [96, 349, 1137, 511], "category": "Text", "text": "In addition, consultations conducted with development partners, implementers and research associations indicated that the degree of impact of the conflict in the areas affected depends on three factors: the duration of stay of the military forces, the agglomeration of enterprises in a specific area and their proximity to main roads. The longer military forces stayed in a certain area, the more likely it is for enterprises to be severely affected and vice-versa. The damage also seems to be worse on townships and semi-urban areas that are along main routes and where there are several enterprises located in specific areas."}, {"bbox": [96, 520, 1137, 576], "category": "Text", "text": "In order to tackle issues of economic recovery for MSMEs in post-conflict areas, this action adopts a comprehensive approach and will address the following specific problems:"}, {"bbox": [96, 588, 1137, 933], "category": "List-item", "text": "*   **MSMEs financing gaps:** Access to finance is a significant factor for the recovery of MSMEs in particular those in manufacturing and agro-processing sectors which have either discontinued business or significantly scaled-down operations as a consequence of the conflict. By nature, these MSMEs require a longer period to receive returns on their investments unlike service related MSMEs that are relatively characterised by quicker returns and cash flows. Inventories and inputs for production may burden these MSMEs from swift repayments to financial resources they would like to access. Support to these enterprises and their ecosystem, through working capital grants/liquidity grants, soft loans, machinery leasing/financing, etc. will enable them to economically recover and support the livelihood of families depending on these MSMEs economic activities. It will further empower them to unlock their multiplier potential in stimulating local economies through creating decent and green jobs for youth and women; and leveraging opportunities in forward and backward linkages with productive and enabling sectors for improved local value addition. The action will further investigate on a specific approach to female-led MSMEs that face a different set of challenges that the male-led ones."}, {"bbox": [96, 946, 1137, 1400], "category": "List-item", "text": "*   **Business skill gaps:** MSMEs in Ethiopia in general are skill-constrained i.e. they lack the necessary skillset to grow their businesses in a sustainable manner. This problem has two ends, on the one hand, MSME owners and managers generally do not have best-practice business skills to lead their enterprises and thus depend on traditional methods of operation while on the other hand employees also lack basic soft and technical skills that hinder them from being fully productive at their workplace. The gap in skills and knowledge by MSMEs also hinder them from accessing further finance for investment. These challenges are more acute in the aftermath of a conflict. The proposed action will therefore, devise targeted support to fill these gaps through providing packages of Business Development Services (BDS) i.e. trainings to improve business and technical skills, coaching and mentoring in areas including but not limited to business planning (marketing, production, organization and management and financial), digital literacy, sustainable and circular business models, networking and business matchmaking. BDS will be designed with gender-sensitive approach taking into consideration these and other constrains regarding travelling and household responsibilities that female participants face while participating in trainings as well as less time and resources they may have in comparison to their male counterparts to fully benefit from the planned activities. It will further include supporting the MSME operators through e.g. peer-to-peer learning, business forums, B2B exchanges. In addition, the action will try to leverage Ethiopian diaspora networks for mentoring and skills development of local businesses, while looking into trade, investment finance, and B2B facilitations⁷."}, {"bbox": [96, 1411, 1137, 1547], "category": "List-item", "text": "*   **Damaged or closed financial institutions:** Due to the conflict, a number of banks and MFIs were damaged and closed operations and incapacitated to finance to the extent they used to do. Moreover, at the time of conflict and post-conflict MSMEs are more vulnerable and subject to financial exclusion. Unpredictability negatively affects economic returns. Consequently, the degree of perception by financial service providers, such as banks that MSMEs being too risky to lend increases compared to normal circumstances. Therefore,"}, {"bbox": [85, 1572, 1145, 1647], "category": "Footnote", "text": "⁷ Ethiopia is estimated to have a diaspora population of over 3 million (IOM, 2021). Many migration development practitioners do not believe the entrepreneurial and financial potential of the Ethiopian diaspora has been fully realized or mobilized in a systematic manner, especially in alignment with the country's development efforts and priorities"}, {"bbox": [1037, 1680, 1144, 1705], "category": "Page-footer", "text": "Page 6 of 20"}]